500 Global’s Christine Tsai shares her 2022 VC predictions

This was another blockbuster year for global venture funding, with 2021 breaking records across the board.

Deal activity is at record highs. Last year, a total of $643 billion was invested globally, according to Crunchbase News, compared with $335 billion in 2020 – that’s 92% growth year over year.

Beyond being awash in capital, the VC industry has also seen a historic number of exits. A record number of companies went public in 2021, with many at huge valuations: 238 companies debuted on the public markets last year valued above $1 billion. In 2020, only 61 companies went public at this valuation.

VCs are paying close attention to the opportunities that are materializing not just in Silicon Valley, but all over the world.

Bigger, better capitalized and more global, the venture industry is poised to take advantage of the transformative technologies coming to market. As of Q4 last year, cumulative dry powder stood at a record $222 billion, according to PitchBook.

Regardless of the macroeconomic challenges ahead, I anticipate startup funding will continue at an accelerated pace this year.

The tech world continues to evolve to meet shifting consumer needs amid a global pandemic. This has created enormous opportunities for founders everywhere to build world-class companies.

I’m seeing this first-hand with several of our investments, such as Bukalapak, an Indonesian e-commerce company that went public in August and operates in a market that benefited in part from consumers staying at home and businesses selling more online during the pandemic.

In terms of where funds will be allocated in the year ahead, there are three transformative global technology trends that many VCs are watching closely, myself included: the rapid rise of web3, capital flows to less obvious founders, and the continued globalization of venture capital.

Web3 goes mainstream

In the past few months, investors and companies have been throwing around a lot of buzzwords, from DeFi to web3 and the metaverse. The increased focus on these areas is pointing to a fundamental shift in the Internet – one that is decentralized and grounded in public blockchains, where users are in the driver’s seat and intermediaries hold less sway.